Time to unshackle telecom products and services from anti-competitive regulations

Regulations in the telecom sector are not reflective of modern-day lifestyles that are not designed to accommodate restrictions, Shahed Alam says

There is an overwhelming consensus on the fact that our modern lifestyles are not designed to accommodate restrictions. The more freedom, the more the possibilities - there are no two ways about it. Unfortunately, the regulation of the telecommunication sector in Bangladesh does not reflect this modern-day reality, at least when it comes to the number of products and services that can be offered to the customers.

The telecom regulator’s position on the matter is substantiated through the data directive issued in August, 2023, which reduced the limit of products and services for mobile operators from 90 to 45. In the immediate aftermath, we saw the data subscriber base in the industry haemorrhaging thick and fast due to this directive.

When people are adopting digital lifestyles in large numbers, such regulatory moves can only be described as an attempt to swim against a tsunami. Just because a regulator takes such action does not mean that it is not anti-competitive in nature.

It all boils down to what customers want. When we look at the survey findings of consumer behaviour these days, there is no confusion on this. Customers want to enjoy personalised experiences when they purchase a product or service in the telecom sector. The key to facilitating customisation of service packages is to accommodate individual preferences. This approach not only enhances customer satisfaction, but also fosters a sense of ownership over their digital experiences. Limiting service offerings to a narrow set of choices undermines this personalisation, restricting consumers’ ability to select the products that best fit their unique needs.

Moreover, as consumers engage in various activities—from video conferencing and e-commerce to social media—the demand for additional services, including cloud storage and cybersecurity solutions, continues to rise. A one-size-fits-all model is simply inadequate to address these multifaceted requirements. For entrepreneurs and small businesses, access to a range of mobile telecom services is crucial for operational efficiency and success. Tailored solutions, in this context, enable businesses to thrive in a competitive marketplace.

Besides restraining the innovative zeal of the telecom industry, the setting of limits on the number of products and services is also deemed anti-competitive under the Competition Act, 2012. Specifically, under Section 15(1) of the Competition Act, 2012, anti-competitive practices are prohibited. These practices include those that directly or indirectly limit or control the production, supply, markets, technical development, investment, or provision of services.

When the number of products or services is restricted, service providers may have more control over pricing. Besides, since it stifles competition, consumers may end up paying higher prices. Such an eventuality is explicitly addressed under Section 15(1)(b), which prohibits practices that result in direct or indirect price fixing.

When the regulatory regime controls the number of products and services, it effectively leads to the creation of a stagnant market replete with standardised offerings, which ultimately undermines consumers’ interest. Such an environment discourages innovation and adaptability, as companies are forced to operate within narrow confines, hindering their ability to explore new ideas and launch creative solutions.

Furthermore, it is often found that regulatory caps disproportionately benefit established market leaders who can better navigate limited choices, while smaller operators struggle to compete effectively. This dynamic reinforces the dominance of leading players, creating barriers to market entry for new competitors and reducing overall market diversity. In a healthy, competitive market, supply and demand should dictate production levels.

Regulatory intervention that limits product variety disrupts these natural dynamics, potentially resulting in inefficiencies, such as inflated prices, misallocated resources, and a lack of quality products. By capping offerings, regulators inadvertently foster complacency among telecom providers, who may feel encouraged to exploit their market share, since there is not much room for product innovation or improvement.

Regulators must be cautious not to undermine the principles of competition law. By imposing restrictions on product offerings, they risk creating an environment that encourages monopolistic or oligopolistic behavior. If all players are capped, the natural competitive pressure that drives improvements in efficiency, pricing, and quality diminishes, ultimately harming consumers. In the telecommunications sector, scalability is key to lowering costs and offering competitive prices.

Though BTRC in its own survey found customers preferring to have personalised offers and were strongly in favour of the three-day data pack, the popular data pack was dropped from the regulation. Not just that, the off-peak data offers were also discontinued through this data directive, though this offer allowed the operators to utilise their free network resources during off-peak hours and the customers were also getting a better deal as far as data price was concerned.

Therefore, the data directive had directly affected the customer segment that is more price sensitive than the rest. Besides, having raised the supplementary duty in the last budget, customers now have to pay Tk 139 to enjoy Tk 100 of telecom service, up from Tk 133.25 in the previous fiscal year. Once we factor in the economic crisis the country is going through, we can easily understand why the average data usage per customer each month is languishing at 7 GB, while Indians are galloping ahead with around 20 GB.

It is clear that the additional cost is weighing down data consumption in Bangladesh. A market leader with its secure revenue-generating base can afford to weather this blow while operators challenging its position are deprived of a key strategic lever to stimulate growth in the market. Hence, the data directive is clearly an anti-competitive move from the regulator’s side.

Hence, there is empirical evidence to show that setting limits on products and services restricts operators' ability to benefit from economies of scale, making it challenging for smaller players to compete against established market leaders.

[Shahed Alam is a barrister-at-law, telecom expert, and the chief corporate and regulatory officer at Robi Axiata PLC]